Mexico: Earthquakes Could Cost $2B to $4B

Analysts and strategists have begun to weigh in on the question. Benito Berber, the senior Latin America strategist at Normura,

A rescuer looks for possible victims at a partially collapsed house after a quake rattled Mexico City on Sept. 19.
Agence France-Presse/Getty Images

lowered his 2017 GDP growth forecast by 0.4%, claiming that the quakes, which have left hundreds dead, could cost between $2 billion and $4 billion. Berber says the economic pain will be short-lived. He raised his GDP growth forecast for 2019 by 0.2%.

We believe the impact on inflation will be small, but could delay the process of moderation in the remainder of the year; having said that inflation in 2018 could moderate more pronouncedly. In addition, we don’t foresee an impact on the exchange rate and expect a reallocation on fiscal spending without reducing the primary surplus targets for 2017 or 2018. With preliminary information and acknowledging the high degree of uncertainty regarding the assessment of damage, we put the cost of the earthquakes between US$2-4bn.

The Mexican government is still adding up the economic losses from the magnitude 7.1 quake that hit Mexico City on Sept. 19. But Moody's Investors Service said in a report Monday that the event killed at least 326 people in the capital and nearby states and "has the potential to be one of Mexico's costliest natural catastrophes."

A preliminary estimate was that the earthquake could knock between 0.1% and 0.3% off Mexico's gross domestic product in the third and fourth quarters.

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